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The alternative minimum tax is a federal income tax imposed on certain individuals, estates and trusts in addition to the regular income tax. Its purpose is to ensure that high-income taxpayers pay at least a minimum amount of tax. The AMT uses a different set of rules than the normal ordinary income tax to calculate taxable income, and it disallows some deductions that are permitted under ordinary tax law.

For example, the AMT does not allow taxpayers to deduct state and local taxes, whereas the normal ordinary tax system does. This means that people in states with high tax rates are more likely to be subject to the AMT than those in low-tax states. In addition, the AMT does not account for inflation or tax cuts, so over time it can push more upper-middle-class taxpayers into its scope. This was a big problem before Congress passed the TCJA, which indexed the AMT exemption amount to inflation and made some other changes.

If you are unsure whether you have an AMT, it is best to consult with your tax professional. There are also some things you can do to lower your risk of being hit by the AMT. For example, you may be able to lower your AMT liability by claiming itemized deductions that aren’t allowed under the AMT, such as interest on second mortgages used for other purposes, or personal property taxes on a car.